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Bank of Israel governor Stanley Fischer had never meant the dispute with Bank Hapoalim to reach the front pages.

"We reached the conclusion that it had to be done," Fischer told the Knesset Finance Committee yesterday about the central bank's demand that Bank Hapoalim chairman Danny Dankner step down. "I can promise you that we wouldn't have embarked on this part without considering every step and thinking of the repercussions, in the middle of the worst financial crisis since World War II," Fischer added.

Fischer has been urging Bank Hapoalim owner Shari Arison to fire Dankner, and clarified that if she won't, the central bank will take the steps it needs to take pursuant to its role as watchdog over the banks. So far the central bank hasn't taken formal steps, the governor said, adding that he hopes a compromise with the bank can be reached.

Hapoalim has the option of appealing the decision by the supervisor of banks, Roni Hizkiyahu, Fischer pointed out.

The Bank of Israel's entire intent is to maintain and buttress the stability of Israel's banks, and to strengthen Bank Hapoalim and its management, the governor said.

"We meant to handle the issue quietly, as it's done elsewhere in the world. We aren't the first country in which the banks supervisor decides, based on the facts, to suggest that the controlling shareholders change the top management," Fischer said. While usually such ousters are done in complete silence, to give people a chance to leave with dignity, that isn't what happened here.

A second goal in this whole affair is to preserve the public's faith in the banking system, Fischer explained. "The fact that the supervisor is taking steps to protect the bank's stability enhances the public's faith in the bank."

Weakening the supervisor's powers would harm the economy, the governor said. "The supervisor of banks last year saved this economy from the problems suffered by other countries," Fiscehr said.

Meanwhile, Dankner isn't sitting idly by. He has been trying to influence members of the Knesset finance and economic affairs committees in the hope that they in turn can persuade the Bank of Israel to leave him alone.

TheMarker has learned that on Monday, Dankner phoned MK Ophir Akonis, head of the Economic Affairs Committee, to request a meeting. Dankner's call came a few hours after the Knesset organizing committee decided that the Economic Affairs Committee should discuss Fischer's demand for Dankner's ouster. On Tuesday Akonis said that he hadn't formed a opinion on the matter yet, nor met with Dankner.

In parallel, figures from Hapoalim contacted MK Moshe Gafni (United Torah Judaism), chairman of the Finance Committee, requesting that he meet with Dankner. Gafni says the Finance Committee will discuss the Hapoalim affair next Wednesday. The discussion was postponed at the urging of the Bank of Israel, which said the committee should wait for Hapoalim to rebut Roni Hizkiyahu's report on problems with the bank's management.

Yachimovich said that Arison should thank Fischer for the fact that her bank still exists. "If we have to compare the judgment of Dankner and Arison, and of the governor and the supervisor of banks...the governor's prevails," Yachimovich said. "We don't work for Arison, but for the public. We should grant firm backing to the supervisor and governor."